Oil Discovery at the Ma’anit-Rehoboth #2?

Earlier this month Zion Oil & Gas, Inc. brought the company’s first oil discovery to the surface at the Ma’anit-Rehoboth #2 well. At this point Zion isn’t saying exactly what this discovery means because, frankly, they don’t know; more testing needs to be done to determine whether or not the well is commercially viable (enough oil to make a commercially productive well).

One thing Zion Oil, and now the world, does know – there’s oil at the bottom of the Ma’anit-Rehoboth #2 well; even if it’s just the bottle Zion Oil Drilling Manager John McKenny is holding in the photo released soon after the ‘discovery.’ Zion, however, would have to be awfully lucky to drill nearly three and a half miles into the earth and hit the only quart of oil in Northern Israel. Chances are there’s more down there than the sample in the photos. How much more is yet to be determined.

In his recent company newsletter Zion Oil & Gas CEO Richard Rinberg announced that, ‘we retrieved a small quantity of crude oil‘ during swabbing operations at the Ma’anit-Rehoboth #2. Rinberg stated that they believe the oil samples came from the ‘uncased’ portion of the well, below 4,825 meters (15,830 ft.). According to the December 18 newsletter, “… as we do not have zonal isolation in the open hole section of the well, we released the workover rig during the past week and are now evaluating the next steps that we can or should take in order to test the zones of interest individually.”

What can we take away from what’s been stated in company newsletters in the last few months?

2. The Ma’anit #1 was only drilled to a depth of 15,500 feet, making the three zones below 15,830 feet at a depth previously not explored by Zion during the Ma’anit #1 operation.

2. The oil samples announced on December 11 came from the area of those three deep zones, but since the well is only cased to 15,830 feet Zion doesn’t know which zone(s) of interest the samples originated from (Zion newsletter December 18).

3. Zion has released the workover (testing) rig at the Ma’anit-Rehoboth #2 site (Zion newsletter December 18).

4. Zion is “now evaluating the next steps that we can or should take in order to test the zones of interest individually.” (Zion newsletter December 18)

5. According to Rinberg: “It is currently anticipated that we will not resume testing procedures on the Ma’anit-Rehoboth #2 well until after March 2010.” (Zion newsletter December 18)

6. Out of an available 327,000 acres of exploration area, Zion’s next planned drilling location is within the Ma’anit structure, just a kilometer from the Ma’anit-Rehoboth #2. (Zion newsletter 12/11/2009)

Translation?

Zion “retrieved a small quantity of crude oil” during swabbing operations below 15,830 feet in an uncased section of the well that contains three zones that “warrant completion testing.” Because the hole is ‘open’ (uncased) they can’t isolate which zone(s) the oil they’ve brought to the surface originated. They’re “now evaluating the next steps that we can or should take in order to test the zones of interest individually.” But they’ve released the testing rig and don’t plan to resume testing until after March of next year. The next well is planned for the same structure on which the Ma’anit-Rehoboth #2 sits.

(We’re crossing over into a little speculation on my part here … not much, but a little. My analysis comes only from the information Zion has given given us in their public documents, as I’ve listed above).

Whatever Zion has ‘discovered’ at the bottom of the Ma’anit-Rehoboth #2, it isn’t (in their minds) a ‘gusher’, at least not yet. If Zion had what they believed conclusively to be a ‘major discovery’, they would have announced it to the world the day it happened. They’re more eager for a ‘major discovery’ than any of us, when it happens they’ll be the first to tell us. Whatever Zion has ‘discovered’ at the bottom of the Ma’anit-Rehoboth #2 is positive enough to warrant plans to isolate the three open hole zones below 15,830 feet.

The company has released the completion rig that was set up at the Ma’anit-Rehoboth #2 site and they don’t plan to resume testing until after March 2010. Three possible explanations come to mind; either the current rig is incapable of the next planned phase of completion testing (casing the ‘open hole’ beyond the deepest ‘zone of interest’, for example), or it had an appointment elsewhere, or “evaluating the next steps” is going to take more than three months. I don’t know the answer, but only one of those explanations seem plausible to me.

That’s enough speculation for one week; lets get back to two things we know. Last month Zion hadn’t discovered even a drop of oil; this month we know they’ve produced at least a quart. That’s something. The second thing we know is something Richard Rinberg reminded us of in his October 30 newsletter, “The end of the matter is better than its beginning, and patience is better than pride” (Ecc. 7:8)

Steve, I don’t feel so bad now, when I see that the pro has as many questions unanswered as us unlearned folks. And that is just what we felt when Richard posted that the Workover rig was leaving. Most every Zion investor I know thought for sure once they showed that bottle of oil, that they would go guns a blazing until they brought up every last ounce in the ground. It was just such a big let down when they announced with very little or sketchy backup that they were pulling out til March. There deifinitely, as you say, are a lot of unanswered questions.We have no choice but to wait for whatever comes next. While I have you here, I noticed in JP today that GIVOT OLAM announced a gas and oil find at their MEGED 5 site. Do you have any take on this?

Cristian Lupu on
December 26th, 2009 2:46 am

Peace to everyone!
I’m 100% sure that one day(i hope today!)plenty of oil it will be discovered in Israel. The problem is God’s timing! As a sign of the Times of the End, oil could be found only at a precise time- when the time is right !- in God’s sequence of Final Events.
So , have patience and do your work. God willing,it will happen!
God Bless You.
Cris-Romania